It’s not clear yet exactly what the final bills from the House and Senate will look like, but one possible component that has received much attention is what is known as the “public option” — a government-sponsored health plan that would be available to all Americans, with financial aid offered to help lower-income families afford the premiums.
“Seventy percent of Americans want a public health care plan option,” said Tony Garr, executive director of the patient advocacy group Tennessee Health Care Campaign. “They’re surveying the public, and the public says, ‘I want a public health care plan choice.’ They don’t even know what the public health care plan choice is, but they don’t like private insurance being their only option.”
Proponents of the public option say such a program could all but eliminate the uninsured population in the United States, currently estimated at around 45 million people. Uninsured patients cost health systems like Mountain States Health Alliance millions of dollars each year in unreimbursed care.
Still, MSHA officials are wary of the ideas being tossed around in Congress right now.
Marvin Eichorn, MSHA’s senior vice president and chief financial officer, said he fears the final result could wind up working much like the federal government’s other two public health insurance programs: Medicare and Medicaid.
“What’s true about both of those programs is that they do not pay providers anywhere near cost,” said Eichorn. “Medicare is now down to 90 percent of cost, and TennCare (Tennessee’s version of Medicaid) is now below 60 percent of cost.”
Hospitals rely on private insurance to help them recoup the money they lose on the uninsured and Medicare and Medicaid patients, Eichorn said, but the number of patients who have private insurance is shrinking.
One of Eichorn’s chief concerns about the public option is that the existence of a government-sponsored health plan would shrink that private insurance pool even more by enticing employers to switch plans.
“If you’re a company and you’re paying $1,000 per employee per year to buy your health insurance — and let’s say the public plan is $750 — it doesn’t take a genius to figure out what you’re going to do there,” he said.
A shift like that wouldn’t be a problem if reimbursement rates from the government plan were equal to those of private insurance companies, but Eichorn doubts that will be the case.
“There’s no bargaining with the government,” he said. “The government basically sets rates. Are those rates going to be below what private commercial insurance pays providers today? I don’t think there’s any doubt about it. So the question is how low is this rate going to be?”
The issue of reimbursement rates is one factor that stalled progress in the House this week. The “Blue Dog Democrats” group insisted, among other things, that the public option’s rates must not be tied to Medicare rates, as other lawmakers had proposed.
Eichorn is glad the group’s voice is being heard.
“If everybody is covered, and they’re all covered with Medicare rates, we couldn’t stay in business,” he said.
Garr believes hospital officials’ fears about the public option plan are somewhat overblown.
“I don’t think the hospitals are looking at the whole ball of wax,” he said. “We’re going to provide coverage for everyone. Everyone who walks through your door is going to have some payment system.”
Compared to the 20 percent to 25 percent of patients who are currently uninsured or underinsured, Garr said, “all of a sudden a Medicare payment looks pretty good.”
Nevertheless, Eichorn and other hospital officials are bracing for the possibility of a hefty financial hit.
“We’re watching every penny,” he said. “We’ve frozen capital. One thing you don’t want to do is overreact and start making a bunch of changes today when you’re not even certain what’s going to happen.”